I'm managing director of Strategic Communications for FTI Consulting, based in Houston. Prior to joining FTI in 2012, I had a 33 year career in the oil and gas industry, working public policy issues for a number of companies including Shell, Burlington Resources, El Paso Corp., and Coastal States. I've also led numerous industry-wide efforts to address regulatory and legislative issues at the local, state and federal level. From April 2010 through June 2012, David served as the Texas State Lead for America’s Natural Gas Alliance. I attended Texas A&I University and The University of Texas, earning B.A. in accounting.

Ceres' Focus On Fracking Misses The Point, Probably Intentionally

The oil and gas industry has been the subject a variety of fear-based attacks from anti-fossil fuel activist groups in recent years, and the last week has seen a new one arise. An activist group out of Boston, CeresCeres, issued a report on February 5 that aims to raise fears among large investors in oil and gas companies that the companies whose stock they hold may have a hard time sourcing water for their hydraulic fracturing operations in the coming years.

Unlike most of the fright scenarios raised by conflict groups around hydraulic fracturing in recent years, the Ceres report at least contains some elements of truth, to wit:

Several of the large shale plays in Texas and around the country happen to be situated in areas that are in drought conditions and/or have historically been water poor regions;

Hydraulic Frac jobs use millions of gallons of water – between 4 and 5 million per well in the Eagle Ford region, for example;

Oil and gas operators often find themselves attempting to source water from the same underground reservoirs used for agriculture, power generation, and municipal uses; and

Operators in the Eagle Ford Shale region used about 19 billion gallons of water for Hydraulic Frac jobs in 2013;

All of this is true – I’ve written about these and other realities extensively here at Forbes.com and other places over the last several years.

Unfortunately, none of the news coverage I saw on the Ceres report informed readers that Ceres is an enthusiastic supporter of climate alarmist Bill McKibben’s 350.org divestment movement, which tries to convince investors to divest holdings in oil and gas companies. Nor did those media outlets inform you that Ceres and 350.org share some of the same major funding sources, and many of the same supporters. To read reports at media outlets ranging from National Geographic to major daily newspapers, one would have though Ceres was just another non-biased think tank.

(Photo credit: zigazou76)

Here are some other things the Ceres report and most of the news stories covering it failed to tell you:

A recent story in the Houston Chronicle pointed out that the City of Houston alone loses about 22 billion gallons of fresh water in a calendar year due to leaks in its municipal pipeline system;

Statewide, the Texas Water Development Board’s numbers report total municipal losses due to leakage at more than 225 billion gallons for 2010, and that is from an audit in which only 54% of the state’s municipalities participated;

Texas is home to 19 coal-fired power plants. The combined annual water use of two of them exceeds the total used for Eagle Ford Frac jobs reported by Ceres for 2013;

Rusty Todd, a Professor at UT, did some research last June and pointed out to readers of the Wall Street Journal that Texans consume 18 times more water in watering their lawns than the highest estimates of water use by the oil and gas industry for Frac jobs. Indeed, the EPA estimates that Americans consume 9 Trillion gallons of water in caring for their lawns every year (yes, that is “Trillion” with a ‘T’);

EPA estimates that Americans use more than 400 billion gallons of water every day. Ceres’ estimate that the oil and gas industry used 97 billion gallons of water from 2011 through 2013 means that, in those 3 years combined, oil & gas used less than 1 quarter of 1 day of overall US water use;

Ceres’ definition of areas with “high water stress” accounts only for the freshwater resources in those areas, completely ignoring brackish water resources. The Texas Water Development Board estimates that Texas is home to 880 TRILLION GALLONS of underground brackish water, much of it underneath the Eagle Ford region and the Permian Basin;

As the Houston Chronicle pointed out in its story on the Ceres report, the Texas Water Conservation Board estimates that the oil and gas industry accounts for less than 1% of overall water used in the state.

Still, the industry recognizes its responsibility to continue to focus on using less fresh water in its operations, and that is exactly what companies have been doing over the last several years, with increasing recycling efforts and sourcing more and more water from brackish formations and other novel sources. Ceres’ numbers do not tell that story because reporting requirements do not require companies to break the reported volumes down in that manner.

But the University of Texas Bureau of Economic Geology estimates that more than 5 billion gallons of oil and gas industry water use in 2011 came from recycled or brackish water, and we know that those efforts have increased dramatically over the last 3 years. Indeed, the Eagle Ford and other major shale plays in the state have essentially become huge laboratories for research and development of new water recycling and conservation technologies and processes.

HalliburtonHalliburton reported last year that it has developed a frac fluid technology that allows it to conduct frac jobs using brackish water with up to 285,000 ppm solids content. Basically sea water, in other words. Other major oilfield service companies are working on their own technologies in this area. ApacheApache Corporation announced late in 2013 that it is now completely off of fresh water in its own hydraulic fracturing operations in some of its Permian Basin operations, sourcing its water needs entirely from recycled or brackish water, and other operators are also developing their own, similar water management programs.

In other words, the oil and gas industry is doing what it has done so successfully for more than 160 years, addressing the water issue with rapidly advancing technology and innovation. Investors in these companies can take comfort in the knowledge that their funds are invested in one of the world’s most technologically advanced industries, one in which management teams are constantly in search of new, more efficient ways to decrease their water footprints.

The activists at Ceres focus on the oil and gas industry for ideological, not scientific, reasons. Anyone interested in addressing Texas’s looming water issues in any real way would do well to focus their attention elsewhere.

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While Ceres has expressed concern about the future use of fossil fuels in a warming world, we have never explicitly encouraged investors to divest from fossil fuel companies nor have we taken a formal position for or against hydraulic fracturing.

This report is focused entirely on the industry’s water use impacts and how most of this activity is taking place in regions that are arid, experiencing drought and ultimately, ‘water stressed’ due to growing competitive pressures for water from growing populations, agriculture and other major water users.

The columnist’s argument that hydraulic fracturing uses less than one percent of total water use in Texas misses the report’s key point – the industry’s water use is highly intense and localized at the municipal and county levels. In many cases, well drilling activity is concentrated in just a few counties in each shale play or basin, with water use often exceeding total water use by local residents. Another point the columnist missed: unlike agriculture and power plants, which return water to the ground or surface bodies after it is used, most of the water used in hydraulic fracturing never returns to the hydrological cycle.

The columnist notes correctly that some operators are making progress in improving water management practices and utilizing alternative water sources, such as brackish water. Many of these same examples are highlighted throughout the report, and Ceres applauds such activity and delves into the complexities of many of these solutions. We also make the point that no one technological solution is a ‘silver-bullet’ (including brackish water use or recycling) and more comprehensive approaches are needed.

It is clear the industry needs to do more. Among the steps we recommend: stronger disclosure about current and future water sourcing needs, close collaboration with local communities and regulators on future needs, and becoming involved with source water protection programs that invest in local aquifers and watersheds. Failing to make progress on these fronts will almost certainly put the industry’s growth and limited freshwater supplies (especially in Texas and Colorado) on a collision course, with negative consequences for everyone.

While Ceres has expressed concern about the future use of fossil fuels in a warming world, we have never explicitly encouraged investors to divest from fossil fuel companies nor have we taken a formal position for or against hydraulic fracturing.

This report is focused entirely on the industry’s water use impacts and how most of this activity is taking place in regions that are arid, experiencing drought and ultimately, ‘water stressed’ due to growing competitive pressures for water from growing populations, agriculture and other major water users.

The columnist’s argument that hydraulic fracturing uses less than one percent of total water use in Texas misses the report’s key point – the industry’s water use is highly intense and localized at the municipal and county levels. In many cases, well drilling activity is concentrated in just a few counties in each shale basin or play, with water use often exceeding total water use by local residents. Another point the columnist missed: unlike agriculture and power plants, which return water to the ground or surface bodies after it is used, most of the water used in hydraulic fracturing never returns to the hydrological cycle. It is gone forever.

The columnist notes correctly that some operators are making progress in improving water management practices and utilizing alternative water sources, such as brackish water. Many of these same examples are highlighted throughout the report, and Ceres applauds such activity and delves into the complexities of many of these solutions. We also make the point that no one technological solution is a ‘silver-bullet’ (including brackish water use or recycling) and comprehensive approaches are needed.

It is clear the industry needs to do more. Among the steps we recommend: stronger disclosure about current and future water sourcing needs, close collaboration with local communities and regulators, and becoming involved with source water protection programs that invest in local aquifers and watersheds. Failing to make progress on these fronts will almost certainly put the industry’s growth and limited freshwater supplies (especially in Texas and Colorado) on a collision course, with negative consequences for everyone.

Thanks for your reply, Monika. While Ceres has attempted to avoid outright endorsement of Mr. McKibben’s alarmist efforts, your common associations are clear to anyone who wants to spend 5 minutes doing a bit of research (which fortunately for Ceres excludes most news reporters), and your representatives are often too clever by half in their public writings and pronouncements.

Here, for example, is Ceres President Mindy Lubber writing a virtual love letter to Mr. McKibben and his “divestment” strategy:

We could go on and on here – including citing many examples of Ceres engaging in similar endorsements in its Twitter feed and regularly including the #divestment hashtags in its tweets, but readers can do their own research and draw their own conclusions.

But please note that, unlike Ceres, I don’t pretend to be something I’m not here. I have a clear point of view and make every effort to state it in very plain terms. In addition to that, my bio accompanies every post I put up on this blog. I’m actually quite proud to be an advocate for oil and natural gas, and for abundant, affordable energy for all Americans in every social strata.

You and the folks at Ceres are free to advocate for whatever you like, but you should also expect to be called out on it when you attempt to hide your real agenda from readers. Because, after all, it’s a free country.

Your posts are accurate but I think the CERES report has more merit than your post. At the end of the day the debate is really about sustainble development and what the industry is doing today relative to water does not follow the definition of sustainable development. The Industry will consume about 90 billion gallons of fresh water this year and it is a consumptive use, meaning it is gone for good. Pumped down a well and taken from the hydro cycle we all learned about in seventh grade earth science. 90 billion gallons of water is enough for about five million people. They have done this for at least four years now.

Yes, comparatively the industry uses much less water than agriculture or other industries but again the root issue is what is the industry doing for itself, not how it compares to other industries. You mention some of the new technologies that have been developed and that reycle is increasing. Really the only place recycle occurs at any level is in the Marcellus, no other basin is recycling over 10% and the industry continues to withdraw fresh water at a rate that is not sustainable despite these technology developments. The only reason the Marcellus is recycling is not because they wanted to it is becuase the geology does not allow them to dispose of it in a well. Thus they either had to ship it to Ohio and pay the transfer costs or start to recycle. They chose recycle because it was cheaper. No other basin has done this because they have cheap and easy access to disposal wells, thus they continue to pull fresh water at amazing rates despite water scaricity as documented by CERES.

The argument that the industry does not use fresh water more than other industries is not a sustainable argument. I do not think you or anyone wants to compete with agriculture. I need to eat and so do my kids. Given the profits in the O&G industry they certainly can afford to use something other than fresh water and stop hauling so much water to disposal wells. The other argument that is often stated is that the indsustry actually creates water due to the cumbustion reaction. Ive seen large O&G companies state this in their annual reports. This is a silly argument from the sustainable development perspective. Everyone that uses this argument forgets that the same combustion reaction that makes water also makes carbon dioxide, a known green house gas.

Im really not sure what your angle is or who is paying you to publish but you are very biased in your materials. You are correct but your points are not aligned to sustainable development by the O&G industry. What the industry is doing is not sustainable. Until there is legislation they will not stop. However the industry has deep pockets for lobby and politicians do not want to impede the cash flow coming from the development. The answer is in the middle but your points are simply a misrepresentation of facts that give the perception that the industry is not removing 90 billion gallons of fresh water for profit.

In some counties hydraulic fracturing account for over 50% of the water being used creating tension between agriculture and energy. I agree that in the grand scheme of the USA that the water use seems insignificant, but on a regional or county scale water it is significant. Upconing and drawdown can play a major role in reducing the quality of the aquifers in this region when large amounts of water are pumped over a short period of time. While the Ceres article is by no means perfect, it does acknowledge Apache for using its produced water. I think you aim to attack Ceres more than the idea of water being an issue (because it is, otherwise oil and environmental companies wouldn’t be paying for research) and honestly it comes off more political than it should be. Ceres never claimed to be non-bias and obviously neither do you, but the recommendations from the article seem fairly even keeled even if their money is going to sustainable energy.